Hot real estate market on pace to break annual record

New York City's real estate market is on pace to break a record this year with a projected $75 billion in land and building sales by the end of 2015, new data from brokerage firm Cushman & Wakefield shows.

So far this year, sales volume is around $38 billion, the data shows.

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The record is $62.2 billion in 2007, the year before the recession hit and the housing market tanked.

"We're a healthy pace above that," Bob Knakal, chairman of New York investment sales at Cushman & Wakefield said during a panel discussion Tuesday morning.

The average prices are increasing, too, hitting $14.6 million so far, a 36-percent increase over last year, he said.

"The development market is absolutely crazy," Knakal said. "Developers are extraordinarily bullish on what the market is going to be like two years from now."

Cushman's data shows 498 development deals totaling $5.7 billion so far this year, with an average price per buildable square foot at $300. In Manhattan, the price is $665 per buildable square foot.

A chunk of the overall activity is generated by first-time buyers from throughout the U.S. and worldwide into the New York market, as well as buyers who once only purchased income-producing buildings now buying plots of land as well.

An increasing rate of transactions are taking place in Brooklyn, which is on pace for more than $9 billion worth of investment sales this year, Knakal said.

Buyers are not discriminatory. They're attracted to neighborhoods throughout the borough, from the long-ago gentrified area of Brooklyn Heights to newer hot spots like Bedford Stuyvesant.

Much of the Brooklyn purchases have been residential buildings, not office and retail space, he said.

"It's for real. It's not a blip," Knakal said. "It's happening across the entire borough."

A chart detailing sales shows $13.6 billion in office building deals in Manhattan, far outpacing any other borough and taking up the lion's share of the $13.9 billion in sales citywide.

Brooklyn had more than $1 billion in sales of elevator residential buildings, $824 million in walk-ups and $616 million in mixed-use buildings.

Leasing activity remained high throughout Manhattan, though Cushman said—as brokerage firm CBRE did during a separate panel later in the day—that Downtown Manhattan has seen a recent decline in activity, compared to an uptick last year.

Overall, new leasing reached 15.3 million square feet and the vacancy rate is 8.8 percent—the first time it has dipped below 9 percent since 2009, Cushman's data shows.

Vacancy rates refer to space immediately available; availability rates, by comparison, also take into account space that would be ready for new tenants within 12 months.